PPPs in India Status, Achievements and Challenges S.R.

Ramanujam
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PPPs in India - Status

National Government has a strong focus on infrastructure investments

Source: Planning Commission

PPPs are making a strong contribution to infrastructure investments

Source: Planning Commission

Energy and telecom have contributed the maximum share in the past
Share of various sectors in infrastructure PPPs

Note: Data represents investments that would be realised till 2011-12. Share of highways will increase significantly since a large number of awarded projects will be executed in coming years. Source: Planning Commission

PPP penetration has grown strongly in transport sector

Source: Planning Commission

PPP projects now spread across several sectors

PPP in India Database PPP projects awarded, under construction or in operation Sector Roads Ports Airports Railways Tourism Urban Development (incl metro) Healthcare Education Total Number of projects Project Cost in bn USD 405 36.1 61 16.5 5 3.9 4 0.3 50 0.92 152 8 17 702 6.02 0.37 0.38 64.51

Note: Excluding telecom and energy projects. Categorisation and definitions vary as compared to Planning Commission. Source: Department of Economic Affairs (Infrastructure division), Government of India

PPP projects now Eight text divisions Text and Listings spread across several sectors
Power Transmission Power Transmission
Jhajjar Jhajjar Maru Maru Aravalli Aravalli

Power Distribution Power Distribution

Delhi Delhi Bhiwandi Bhiwandi Agra Agra

Airports Airports
Delhi Delhi Mumbai Mumbai Bangalore Bangalore Hyderabad Hyderabad

Ports Ports
Pipavav Pipavav Mundra Mundra Hazira Hazira JNPT JNPT Vallarpadam Vallarpadam

Highways Highways
Delhi Gurgaon Delhi Gurgaon Baroda Halol Baroda Halol Panagarh Pansit Panagarh Pansit Vivekananda bridge Vivekananda bridge

Water Water
KUWASIP KUWASIP Nagpur Nagpur Aurangabad Aurangabad Latur Latur Salt Lake Salt Lake

Urban Infrastructure Urban Infrastructure

Hyderabad SWM Hyderabad SWM Kohlapur W/water Kohlapur W/water Dehradun SWM Dehradun SWM Dehradun terminal Dehradun terminal Amristar terminal Amristar terminal PURA PURA

Rural Rural

Indl Parks Indl Parks

Pharma city Pharma city

Note: Sample projects in each sector

PPPs continue to be a priority in national planning

Efforts to attract private investment into infrastructure through the PPP route have met with considerable success. PPP based development needs to be encouraged wherever feasible. PPPs with appropriate regulation and concern for equity should also be encouraged in social sectors, such as health and education. Several States Governments are already taking steps in this direction.
Source: Draft approach to the 12th Five Year Plan, August 2011, Planning Commission

The PPP Eco-System in India

Sectoral laws and regulations enabling or permitting PPPs Sectoral laws and regulations enabling or permitting PPPs e. Electricity Act 2003, Indian Ports Act e. Electricity Act 2003, Indian Ports Act Cabinet Committee On Infrastructure Cabinet Committee On Infrastructure Department of Economic Affairs Department of Economic Affairs Planning Commission Planning Commission State Infrastructure Development State Infrastructure Development Companies/ Boards Companies/ Boards e.g. Gujarat Infrastructure Development e.g. Gujarat Infrastructure Development Board Board State Urban Development/ Finance State Urban Development/ Finance Corporations, Municipal Funds Corporations, Municipal Funds Central Line Ministries, Statutory bodies Central Line Ministries, Statutory bodies e.g Ministry of Power, NHAI e.g Ministry of Power, NHAI Line Ministries in the States, Statutory Line Ministries in the States, Statutory bodies, Utilities bodies, Utilities e.g Madhya Pradesh State Road e.g Madhya Pradesh State Road Development Corporation Development Corporation Urban Local Bodies, Metropolitan Urban Local Bodies, Metropolitan Development Authorities Development Authorities

Sector agencies

Sector regulators Sector regulators e.g Airports Economic Regulatory Authority, Electricity Regulatory Commissions e.g Airports Economic Regulatory Authority, Electricity Regulatory Commissions Developers. Operators, Contractors, Industry associations Developers. Operators, Contractors, Industry associations Focussed infra Focussed infra financiers financiers Transaction Transaction advisors, Auditors advisors, Auditors
State owned State owned commercial banks commercial banks

Private and intl Private and intl banks banks

Private equity Private equity funds funds

Investment Investment banks, arrangers banks, arrangers

Infrastructure focussed Infrastructure focussed voluntary organisations voluntary organisations

Research and training Research and training institutions institutions

Specialised Specialised infrastructure media infrastructure media

Enablers Financing
Project support Project support Fiscal benefits Fiscal benefits Sector Priority Sector Priority
PPP is first choice execution model in PPP is first choice execution model in highways, ports and airports sector highways, ports and airports sector PPPs are integrated into sector plans PPPs are integrated into sector plans Solar Mission Solar Mission National Highways Development National Highways Development Prorgamme Prorgamme Jawaharlal Nehru National Jawaharlal Nehru National Renewal Mission Renewal Mission Viability Gap Fund Viability Gap Fund 100 Projects, 9.8 bn USD project 100 Projects, 9.8 bn USD project cost, 1.82 bn USD viability gap cost, 1.82 bn USD viability gap assistance assistance India Infrastructure Project India Infrastructure Project Development Fund Development Fund 40 projects already approved 40 projects already approved Pilot projects initiative Pilot projects initiative Being replicated by States Being replicated by States

Financing instruments Financing instruments

Scheme for Infrastructure Financing Scheme for Infrastructure Financing through IIFCL through IIFCL 165 projects, 52 bn USD 165 projects, 52 bn USD project cost, 4.9bn USD project cost, 4.9bn USD sanctioned, 2.6 bn disbursed sanctioned, 2.6 bn disbursed (Dec 2010) (Dec 2010) Infrastructure Debt Fund Infrastructure Debt Fund

Tax exemptions Tax exemptions Infrastructure Companies Infrastructure Companies Banks and intermediaries Banks and intermediaries Bond investors Bond investors

Enablers Policy and Process

Cabinet Committee on Cabinet Committee on Infrastructure Infrastructure PPP Appraisal Committee for PPP Appraisal Committee for Central sector projects Central sector projects Empowerd Institution/ Empowered Empowerd Institution/ Empowered Committee for approving viability Committee for approving viability gap projects gap projects Similar processes at State level Similar processes at State level PPP definition PPP definition PPP policy PPP policy PPP rules PPP rules PPP guidance manual PPP guidance manual Model Concession Agreements Model Concession Agreements Standardisation Standardisation Facilitation Facilitation Standardised procurement Standardised procurement documents documents Developers Developers Consultants Consultants Approvals Approvals

PPP policies PPP policies

Supporting PPP cells in States and Supporting PPP cells in States and central line ministries central line ministries Capacity Building Programmes Capacity Building Programmes Knowledge sharing workshops Knowledge sharing workshops Online PPP toolkit Online PPP toolkit Sectoral PPP toolkits Sectoral PPP toolkits Guidelines on specific topics (PPP Guidelines on specific topics (PPP monitoring) monitoring) Panel of transaction advisors Panel of transaction advisors

ADB Involvement in infrastructure

Sovereign Loans National Highways Authority National Highways Authority Urban Sector Improvement Programmes Urban Sector Improvement Programmes

Financing

FI loan to IIFCL FI loan to IIFCL Non Sovereign Loans and Private Sector Loans Non Sovereign Loans and Private Sector Loans Bangalore Metro Bangalore Metro Energy sector loans Energy sector loans

Enabling PPPs

Pilot Projects Pilot Projects PPP Cells PPP Cells Knowledge and Policy support Knowledge and Policy support

Achievements and challenges

Achievements so far
Political priority for infrastructure Political priority for infrastructure Political acceptance of PPPs Political acceptance of PPPs Sector specific solutions Sector specific solutions Support to make projects viable Support to make projects viable Domestic financing Domestic financing Standardisation Standardisation

What has worked and what hasnt

Power Roads Ports Airport Urban Transp W&S Health Edu. Rural

Political Clarity Bankable revenue model Enabling framework

Project pipeline

Implementation bottlenecks

Expanding the PPP momentum in other sectors will be challenging

Challenges
Brownfield projects, Networks Water, Slum renewal, Power distribution, urban Brownfield projects, Networks Water, Slum renewal, Power distribution, urban transport transport Focus on service delivery, not just asset creation -- Health, Education Focus on service delivery, not just asset creation Health, Education Project owners are at State and city level -- Understanding and acceptance varies Project owners are at State and city level Understanding and acceptance varies Substantially unviable sectors Primary health and education Substantially unviable sectors Primary health and education Financing gaps in the domestic market Financing gaps in the domestic market

What should be the focus

PPPs for performance, technology and scaling up, Not just for PPPs for performance, technology and scaling up, Not just for financing financing Sector specific solutions Sector specific solutions New models for service delivery, performance monitoring New models for service delivery, performance monitoring New financing products to plug the gaps New financing products to plug the gaps Blending plan programmes with private investment Blending plan programmes with private investment Engagement with States and cities to deepen the PPP penetration Engagement with States and cities to deepen the PPP penetration

Thank You

ram@samatva.co srramanujam@gmail.com +91 9833778822